MBTA State of Good Repair Database Transit Finance Learning Exchange MBTA State of Good Repair Database Jonathan R. Davis Deputy General Manager & Chief Financial Officer April 7, 2008

Background: Assessing the Authority's Transit System

MBTA Profile The oldest subway system in the United States – 1897 5th largest transit property Multimodal public authority 175 communities and 4.5 million people served 1.1 million passengers per day 55% of all work trips to Boston are made on the MBTA 60% of the commuters traveling to Boston’s financial district ride the MBTA

2002 – Massachusetts Taxpayers Foundation Elimination of unlimited state subsidies under forward funding changes the way Capital projects are evaluated Debt burden limits the ability of MBTA to fund Capital program Reliance on debt financing and limited “paygo” capital adds to the debt burden Capital needs of antiquated system are growing faster than revenues Maintenance and modernization of the current system must be the top priority

2003 – Capital Spending and Infrastructure Report MBTA must operate within well defined limits to fund the capital program State of Good Repair (SGR) study assessed the condition of MBTA’s capital assets SGR Database provides a uniform and equitable system for identifying and prioritizing capital Needs Assets within their useful life are in a State of Good Repair Backlog of capital investments needed to achieve SGR estimated at $2.7 billion

2007 – Transportation Finance Commission Findings The MBTA has a capital backlog of $2.7 billion for rehabilitation (excluding expansions) Spending $470 million per year will keep the system in its current state but will not allow a reduction in the $2.7 billion backlog In order to eliminate this capital backlog within the next 20 years, the MBTA needs to spend $620 million or more per year These maintenance needs do not go away; they just become more expensive

Capital Investment Program (CIP) Rolling 5-year capital program Implements the 25-year Program for Mass Transportation Which is not financially constrained The CIP is financially constrained The Draft CIP includes the current fiscal year (FY 2007) Includes $470 million per year in State of Good Repair investments

Capital Investment Program Statutorily Mandated Criteria Effectiveness of the State’s transportation system Service quality Environment Health and safety Operating costs State of Good Repair Debt Service

What does the Capital Program Invest in? Over 2,500 Revenue Vehicles 275 Stations 885 Miles of Track 476 Bridges 20 Miles of Tunnels 19 Maintenance Shops The MBTA’s infrastructure is extensive and has major capital needs.

MBTA Capital Needs: Tracks Before After Highland Branch

MBTA Capital Needs: Stations After renovation Boylston Station

MBTA Capital Needs: Tunnels Program is a multi-phase effort (through 2009) to upgrade dewatering equipment within select tunnel pump rooms Program includes new pumps & motors, new valves & piping, new controllers, new/upgraded power supply (AC+DC), lighting and enhanced security & alarm indications. Blue Line work is proceeding at Prescott (80%) and Underharbor (East and West-35% and 90%) Orange Line work is proceeding at Charles River (50%) and Follen (65%) Green Line work at Beacon Junction is complete, and proceeding at Muddy River (95%), Comm Ave (98%), Hollis (50%) and Church (85%) Red Line work at Harvard Ejector is complete, and proceeding at Porter (30%), Garfield (85%), Harvard Busway (80%) and Central (80%) Before After New Equipment for Pump Rooms

MBTA Capital Needs: Power Program is a multi-phase effort (through 2009) to upgrade dewatering equipment within select tunnel pump rooms Program includes new pumps & motors, new valves & piping, new controllers, new/upgraded power supply (AC+DC), lighting and enhanced security & alarm indications. Blue Line work is proceeding at Prescott (80%) and Underharbor (East and West-35% and 90%) Orange Line work is proceeding at Charles River (50%) and Follen (65%) Green Line work at Beacon Junction is complete, and proceeding at Muddy River (95%), Comm Ave (98%), Hollis (50%) and Church (85%) Red Line work at Harvard Ejector is complete, and proceeding at Porter (30%), Garfield (85%), Harvard Busway (80%) and Central (80%) Before After Substation DC Breakers

MBTA Asset 20-Year Replacement Cost - By Asset Type Revenue Vehicles 32% Signals and Power 21% Track 18% Shops and Facilities 9% Bridges 7% Stations 6% Other Total 20-Year Replacement Cost: $12.4 billion The required infrastructure investment far surpasses the Authority's financial resources

Defining the Issue: Developing the State of Good Repair Model

State of Good Repair (SGR) Initiative “Fix It First” strategy Assessed current state of capital assets System to identify and prioritize capital renewal and replacement needs Estimated backlog ~ $2.7 billion Annual capital spending of $620 million needed to eliminate the backlog in 20 years SGR investment rate Approximately 94% of FY08 – FY13 Capital Investment Program MBTA Vehicle Miles and Capital Expenditures

What is the State of Good Repair? State-of-Good Repair — Replace and Renew assets when needed Assets are renewed at critical midlife points Engine replacements, bridge re-deckings, roof replacements Assets are replaced at the end of their useful lives Buses 15 years Rail cars 35 years Bridges 50 years

State of Good Repair Defined State of Good Repair: The ideal operating condition A “perfect” capital replacement policy SGR All assets beyond their service life All assets within their service life

Implementation: Designing the State of Good Repair Database

State of Good Repair (SGR) Database Two Project Objectives Demonstrate ongoing funding needs and consequences Engineering assessment of current assets Develop long range capital planning model Project programming under constrained funding

What is the SGR Database? It is a tool to assist the MBTA in identifying and prioritizing renewal and replacement actions needed to bring and sustain existing capital assets to a state of good repair Front-end Microsoft Access driven application Analyzes more than 2,400 individual capital asset records

SGR Database Main Functions Organize, store and facilitate various types of queries of the capital asset information Identify asset renewal and replacement activities and cost necessary to bring and maintain the MBTA system to a state of good repair Score and rank candidate actions subject to MBTA capital budget criteria Create, analyze and compare capital budget and related policy (e.g., asset useful lives, renewal cycles, capital budget allocation priorities) scenarios

SGR Database (Model) Requirements Focus on high-cost MBTA assets Not a maintenance database of all assets Requires periodic data updates Not a static database Staff and resources required Support objective analysis Uniform criteria and process Reports consequences Run scenarios in reasonable time frame Less than 5 minutes

SGR Programming Process is Sequential (Year-by-Year) Identify candidate projects Actions come due Delayed projects from prior years Score and rank projects Fund projects in rank order until Cost of project is greater than the funds remaining Mark unfunded projects as candidates for next year Carryover remaining funds to next year

SGR Main Menu Example

State of Good Repair Input Variables

State of Good Repair Database — Assets Table Stores information about all key MBTA assets Vehicles Facilities Systems

Asset Table Attributes “Condition” Measures Age Life Project “Action” Costs Replacement/Renewal Contingency Factors Cash flow years Ranking Measures Condition measures Operational importance Affected ridership

Scoring Project Candidates Age Age as % of Service Life Operational Impact Yes/No Selected assets are essential to system operations Cost-Effectiveness Cost of Action/Ridership Reflects customer service impacts

Using the State of Good Repair Database as a Management Tool

Funding the Backlog of Infrastructure Investment Current State of Good Repair backlog – $2.7 billion* Chart 1 – Investing $410 million per year increases backlog to $4 billion in 2024 Chart 2 – Investing $470 million annually maintains the backlog at $2.7 billion Chart 3 – An investment of $620 million per year is necessary to eliminate the backlog by 2024 *Analysis performed in 2006

The MBTA Has Used the SGR Database in Several Contexts Internal management Discussions with policy Makers Planning and analyses

Internal Management Uses Implications of Current Investment Patterns Where are we headed ? MBTA SGR Goal Setting Where would we like to go? Yard Stick to Measure Progress Towards SGR Are we getting closer to our goals?

External Uses: Discussions with Policy Makers “SGR Database as the Bully Pulpit” Briefing the Board of Directors and Secretary of Transportation Informed funding discussions with the state legislature and Governor’s office Emphasizing the need for state of good repair investments with customers and other stakeholders

Other Potential SGR Enhancements and Licensing The Authority is currently upgrading and increasing the functionality of the State of Good Repair Database Updated cost drivers Ability to calculate the impact of State of Good Repair investments on the operating budget MBTA has begun to look at the possibility of licensing the State of Good Repair Database Applicability to many infrastructure intensive government agencies

State of Good Repair Conclusion No transit system can meet the “ideal” system condition We can better understand the capital investment needs of our organization We can optimize our investments We can make more effective and informed decisions